Correlation Between Small Cap and Suncor Energy
Can any of the company-specific risk be diversified away by investing in both Small Cap and Suncor Energy at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Small Cap and Suncor Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Small Cap Core and Suncor Energy, you can compare the effects of market volatilities on Small Cap and Suncor Energy and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Small Cap with a short position of Suncor Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Small Cap and Suncor Energy.
Diversification Opportunities for Small Cap and Suncor Energy
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Small and Suncor is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Small Cap Core and Suncor Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Suncor Energy and Small Cap is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Small Cap Core are associated (or correlated) with Suncor Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Suncor Energy has no effect on the direction of Small Cap i.e., Small Cap and Suncor Energy go up and down completely randomly.
Pair Corralation between Small Cap and Suncor Energy
Assuming the 90 days horizon Small Cap Core is expected to generate 1.22 times more return on investment than Suncor Energy. However, Small Cap is 1.22 times more volatile than Suncor Energy. It trades about 0.19 of its potential returns per unit of risk. Suncor Energy is currently generating about 0.19 per unit of risk. If you would invest 1,393 in Small Cap Core on August 27, 2024 and sell it today you would earn a total of 93.00 from holding Small Cap Core or generate 6.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Small Cap Core vs. Suncor Energy
Performance |
| Timeline |
| Small Cap Core |
| Suncor Energy |
Small Cap and Suncor Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Small Cap and Suncor Energy
The main advantage of trading using opposite Small Cap and Suncor Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Small Cap position performs unexpectedly, Suncor Energy can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Suncor Energy will offset losses from the drop in Suncor Energy's long position.| Small Cap vs. Pro Blend Moderate Term | Small Cap vs. Hartford Moderate Allocation | Small Cap vs. Qs Moderate Growth | Small Cap vs. Dimensional Retirement Income |
| Suncor Energy vs. Imperial Oil | Suncor Energy vs. Ecopetrol SA ADR | Suncor Energy vs. Petroleo Brasileiro Petrobras | Suncor Energy vs. Equinor ASA ADR |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
Other Complementary Tools
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges |